Friday, January 21, 2011

Morning Update/ Market Thread 1/21

Good Morning,

Equity futures are higher this morning with the dollar down sharply, bonds lower, oil down slightly, and gold is down which does not match the fall of the dollar. Yesterday’s mid-day bounce did move food commodities sharply higher as well.

Despite the bounce yesterday, the McClellan Oscillator worsened to the -100 range showing that the majority of stocks are now in downtrends, but new 52 week highs and lows remained subdued.

There is no significant economic data released today, and it is Options Expiration with a $7 to $9 Billion POMO operation planned for today.

I’m only going to discuss one important news item today, and that is President Obama’s appointment of GE’s CURRENT CEO, Jeff Immelt, to Chair a new White House Economic Advisory Council. His appointment is meant as a replacement to outgoing Paul Volcker. Here is the CNN spin:
Obama taps GE chairman to chair new White House economic group

Washington (CNN) -- The White House will announce a new economic advisory council on Friday, one that will be headed by Jeffrey Immelt, the CEO and chairman of General Electric.

"Because we still have a long way to go to get Americans back to work and strengthen our economy, the President will announce on Friday that he will sign a new Executive Order creating a new board, the President's Council on Jobs and Competitiveness, which will have a new composition and new mission as we move to a new phase in our economic recovery," a White House statement said.

"The Council will focus on finding new ways to promote growth by investing in American business to encourage hiring, to educate and train our workers to compete globally, and to attract the best jobs and businesses to the United States."

The council replaces the old Economic Recovery Advisory Board that was headed by Former Federal Reserve Chairman Paul Volcker.

"President Obama has asked me to chair his new President's Council on Jobs and Competitiveness," Immelt said in a Washington Post op-ed piece published Friday. "I have served for the past two years on the President's Economic Recovery Advisory Board, and I look forward to leading the next phase of this effort as we transition from recovery to long-term growth.

"The president and I are committed to a candid and full dialogue among business, labor and government to help ensure that the United States has the most competitive and innovative economy in the world," he said.

"Jeff Immelt's experience at GE and his understanding of the vital role the private sector plays in creating jobs and making America competitive makes him up to the challenge of leading this new Council," President Barack Obama said in a statement. "I also want to thank my friend Paul Volcker, whose service not just during this difficult period but for decades has been invaluable to me and the American people."

Repugnant is the first word that comes to mind, “oh shit” are the next ones.

It appears to me that the special interest takeover of the United States is just about complete. Immelt took over GE from “Chainsaw” Jack Welch in the year 2000, then proceeded to run the company into a bankrupt condition largely by taking on far too much risk within GE Capital which made GE effectively a financial company who just also happens to make jet engines. They could care less about making light bulbs or appliances, they were making subprime loans like crazy to every homeowner with a heartbeat and to every rag tag airline around the globe. They got into derivatives, and when their leverage turned on them, it bankrupted the company. But instead of the rule of law (and the rule of nature) being allowed to run its course, Hank Paulson and the boys stepped in with billions to bail GE out. Today they're back to being a mark-to-fantasy Ponzi financial company reporting false profits just like the rest of the insolvent financials. In fact, just this morning (coincidentally?) GE and Immelt reported stellar profits:
General Electric posts 31% earnings jump

NEW YORK (CNNMoney) -- General Electric logged higher fourth-quarter earnings and revenue Friday that beat Wall Street's expectations, getting a boost from its finance arm and strong growth in equipment orders.

The Fairfield, Conn.-based conglomerate said its fourth-quarter earnings from continuing operations rose 31% to $3.9 billion. Earnings per share rose to 36 cents per share, up 33% from a year earlier. Analysts polled by Thomson Reuters had forecast a profit of 32 cents per share for the quarter.

Net income, including discontinued operations, was $4.5 billion, up 51% from a year earlier.

The industrial giant said its year-over-year revenue rose 1% to $41.4 billion -- the first positive growth in nine quarters. Analysts expected the company to report a 4% drop in revenue to $39.9 billion.

"GE ended 2010 with three consecutive quarters of strong earnings growth," Chairman and CEO Jeff Immelt said in a prepared statement, highlighting gains in the industrial segment, as well as strength in orders and equipment.

Orders on the rise: Fourth-quarter orders were up across the board. Overall industrial orders jumped 12% year-over-year, with a 20% surge in equipment orders and a 5% increase in service orders. Orders in energy infrastructure grew 4%. Meanwhile, the company's backlog increased by $3.1 billion to a record $175 billion.

"They have been posting solid order growth for a while now, so it's not difficult to see the company continuing to grow because of this," said Daniel Holland, an equity analyst at Morningstar.

The health care sector was another bright spot, with revenue rising 8% and profit jumping 10% in the quarter.

GE (GE, Fortune 500) manufactures products ranging from jet engines and health care technologies to light bulbs and electric cars, so the company is widely viewed as a barometer of the overall health of the economy.

"It was a team effort in terms of the overall story," said Holland. "It seems like the individual businesses are starting to make their way through the recession and are starting to turn around."

Revenue and profit at the company's energy infrastructure was also an encouraging sign, with revenue only slipping slightly and profit inching higher.

"You always want to see growth particularly out of its power generation segment," he said. "That segment is driven by electricity demand across the world, and electricity demand is linked to economic growth and activity -- so we want to see the wheels of the economy continuing to improve."

GE Capital recovering: GE Capital, the company's finance division that was hard-hit during the financial crisis, continued to improve in the fourth quarter. Net income in the unit rose to $1.1 billion from $100 million a year earlier.

"GE Capital is doing better than I think anyone would have expected a couple quarters ago, let alone two years ago when we were in the depths of the recession," said Holland. "Even in its weakest spot -- commercial real estate -- you're seeing losses lessen."

Did you catch all that? The spin in the talk and in the reporting is that orders and infrastructure grew… but that growth is anemic, especially when you consider that it is measured in dollars and that their revenue growth is WEAK. So, where did profits really come from? GE Capital whose profits jumped from $100 million to $1.1 BILLION!!! That’s a one BILLION dollar jump in financial profits in one year!! Can you say “Mark-to-Model? I thought you could. I can also say, “ACCOUNTING FRAUD.” This on the back of hot money pouring in from the “Fed.”

Remember, those closest to creation of money, particularly Ponzi money, profit the most from it. Of course Immelt loves the current hot money, no adult, no rule of law, Ponzi environment and I’m certain will do everything in his power to keep it flowing to the benefit of his FINANCIAL company along with all the other PHO Wall Streeters.

Again, I will simply point you to a doubling in the past 6 months in underlying food commodities and warn that another year of the current policies and hot money will literally produce starving Americans, not just starving people in 2nd and 3rd world countries. I cannot think of a worse pick, this President continues to show that he is a President of the special interests and NOT OF THE PEOPLE.

They sell these appointments as if they are bringing economic “expertise” in to help the economy and to create jobs, but what they are really doing is accelerating the looting and the debasement of our money. These are the same people who ran the economy into the ground, they ran their businesses into the ground, and they are the exact wrong people to be appointing. America is in BIG TROUBLE.

Did you catch that yesterday the “Fed” changed their own rules again which now makes it so that they will not allow themselves to become technically insolvent on paper? Oh the acts that desperate people will take… if you’re reading this I know that thankfully some people are paying attention.

I read a line this morning from a good article that said basically, “We’re like Tunisia, only less aware…”